More Unaffordable Affordable Housing

The Lawson Companies., a Virginia Beach multifamily development company, is planning to construct a $19.25 million, low-income housing project in South Richmond, reports Richmond BizSense. The apartment complex will have 96 units, for an average cost of $200,000 each. Rent for two-bedroom apartments will average around $1,000 a month, while three-bedroom units will go for $1,100.

“We see this project drawing a lot of families,” said Freddie Fletcher, a Lawson development associate. “It’s a good market over there for families looking for an affordable, Class A apartment.”

The Virginia Housing Development Authority (VHDA) is providing financing for the development. The article does not say whether or not the $1,000-a-month rent will be subsidized from vouchers or other public funds.

The project appears to be similar to many other lower-income housing projects in Virginia. Lawson Corp. has $290 million in ongoing development across Hampton Roads and Northern Virginia, and is looking to do more deals in the Richmond region.

Questions, oh, so many questions. What does the VHDA financing look like? How much is the implicit subsidy from low-interest rate loans worth? How much of that subsidy flows to Lawson Companies bottom line, and how much to lower rent?

Who else, if anyone, is subsidizing rent for the low-income units, and how large is that subsidy?

The community will include a clubhouse with a fitness center, laundry facilities, dog park, playground, and indoor and outdoor bike storage. Very nice. These amenities certainly look more appealing than those in, say, public housing such as Mosby Court or Creighton Court. What does it take for a family to qualify for subsidized housing in such a nice apartment complex, and how are tenants selected?

The project has set aside significant space for parking. Are we to assume that the low-income residents living in the project will all own cars? Or are the parking spaces an artifact of mindless city mandates that ignore renter demographics?

How many square feet will each “Class A” apartment have? What is the justification for the square footage? Is there an expectation that lower-income renters are entitled to the same square footage and amenities as middle-class families who pay their full freight?

Bacon’s bottom line: A cost of $200,000 per unit strikes me as excessive. Why does it cost so much to house lower-income families? Is there no better way?

We need an analysis of what happens in the long term, 20 years or so, in the neighborhoods of affordable-housing units. We certainly have many examples to study. A Georgia State University study of mixed neighborhoods showed that, after 20 years, such neighborhoods either become 100% wealthy or 100% poor. Mixing does not work. People like to associate with people in the same income bracket.

So if we add up all the taxpayer costs for housing, food and MedicAid – is that better than paying a living/minimum wage?

and another question – if you build this housing on the cheap so it’s very basic housing ONLY for “poor” folks – do we essentially go back to building “projects” that concentrate poverty and crime? Will that be going backwards to what we did before?

If the contractor could develop similar units for $150,000, there could be 128 units for the same investment. But the vendor has no incentive to look for ways to deliver more for less. And the government is clueless as to how to inspire the market to deliver this type of result.

I’m not arguing $150,000 per unit is the right price. But if these people, both inside and outside government, really want to help provide more affordable housing, they would think this way.

This sort of low income housing project will surely fail without rigorous screening, plus the imposition of strong programs of serious, enlightened and practical cultural support without today’s harmful indoctrination and propaganda campaigns. Today’s problem in these cases is not solved by large projects of $200, 000 units of three story mid-rise. It is solved by a renewal and revitalization of culture and productive social habits. With that social renewal our housing problems will be solved forever.

Like anything else the government “buys” from HVAC systems for schools to computer systems for counties or highways for VDOT – I’m quite sure the specs could be written and the project put out for bid and the low bid awarded and move on.

Why is this an issue at all?

Methinks there is a resentment to taxpayers having to buy this stuff at all and so all kinds of “questions” about it’s “cost” are the usual discussion with no one fessing up that what they’d REALLY LIKE is for taxpayers to not have to buy this stuff at all!.

But putting concentrating poor folks into the cheapest housing possible is a know recipe for failure. It’s penny-wise and pound-foolish and just breeds crime and requires heavy duty security on-site and a continuous police-presence to ferret out the bad guys who will basically take over the project and rule it otherwise.

“mixed” housing basically means giving vouchers to folks who then go out and find single units in existing neighborhoods that are “affordable” – not warehousing all of them in one ghetto.

Affordable housing costs so much because housing costs so much. This private developer is buying lumber, air conditioners, siding, etc. on the open market just like everyone else. And they are competing for labor on the market just like everyone else. Much of which as been constrained by the current federal administration (steel, lumber, and appliance tariffs, and for better or worse migrant labor), and still pent up demand in most urban housing sectors. I’d ask you to go try and build a small home, complete with permits, drawings, windows and doors for less. Trust me, you cannot.

Most of our affordable housing now is created, developed, owned and managed privately. Not because it has higher margins (the “government” isn’t that dumb), but because it has surety. And that is something that developers, who are very economically by nature conservative, love.

Does “migrant labor” mean employing illegal immigrants to avoid paying higher wages? Basic economics means you pay more for goods and services that are in short supply. Pay more for domestic labor and you won’t have problems with shortages.

And I don’t buy the “I can’t make a fair profit” argument. Earlier this month, landowners and developers told the McLean Community Business Center task force that they needed returns of 25% or more to build. How many people are getting returns like this?

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